Company shares are seen as a type of property. Owners of such have the option of selling or transferring them to new owners as per Companies Act 2006. Transfer of shares is legal and can be done by shareowners via a stock transfer form from Companies House.
Why are shares transferred?
The reason for transferring of shares can vary and they can be any of the following:
- The business needs additional investment
- A new business partner joined the board of directors
- A shareholder wants to leave and wants to have his investment back
- Death of a shareholder
- A company director’s resignation or retirement or removal from office
- Transfer of shares to ISA or a tax-efficient pension
- Shares are gifted to spouse or family member as a tax-efficient strategy
- Business owner’s retirement and he/she wishes to transfer the business to the children, or he/she wishes to sell the business
Transferring share ownership
Fill out a stock transform form for the legal transfer of share ownership. There is also no need to inform Companies House at this time. Changes done must be reported on the next confirmation statement done annually. But a confirmation statement must be filed as soon as possible. Should there be a need for Stamp Duty, HMRC should be notified.
Understanding a company’s articles of association is important since it is the document that contains all stipulations with regard to shares. Some companies allow that shares only be gifted or sold to existing members, family holders, or employees. Knowing how these shares are managed in a company is important.
What is the Stock Transfer form?
Companies House has a share transform form for owners to fill out so a transfer would be completed. The form would ask for information that includes these:
- Company name
- Company registration number
- Number of shares to be gifted or sold
- Class of shares to be gifted or sold
- Name and address of the transferor (who is the current shareholder)
- Name and address of the transferee (who is the new shareholder)
- Amount per unit that has or has not been paid
- Details of non-cash payment should this be applicable
- Authorized signature of company director
- Stamp duty liability should this be applicable
Getting the share transfer form from Companies House can be done here.
Additional important details
Should the value of the sale of all shares be more than £1000, it is the transferee who is liable for payment of stamp duty at 0.5%. HMRC works on submitted forms for 5 to 10 business days. It would take additional 5 working days to get the form back as it is sent via mail.
With the stamp duty paid and the form received by the party who filed it, the form must be given to the company’s registrar, who usually is the company director. This should be accompanied by a certificate of shares which needs to be cancelled. The registrar would then issue a new certificate of shares.
In case changes in a business’ share structure happen, Companies House must be informed about these. Reporting the changes must be done in a month, especially if more shares were issued. In case of changes to share structure, there is a special resolution that is needed especially if these happen:
- Change in number of company shares and total value
- Changes in how the distribution of shares is done
- Cancellation of any shares
- Currency change to shares
Completing the form to legally transfer shares is essential and must include all necessary documents for faster processing by HMRC. Doing this prevents rejection of the form. Should you need a registered office address to ensure that all your mail is received well, Company Address can assist you with that.
published under Business Address Guides
